What is the future for product placement?

After a slower-than-expected uptake since getting the green light in the UK, will the practice become a fixed part of the marketing mix?

Gary Knight... ITV commercial content director
Gary Knight... ITV commercial content director

GARY KNIGHT COMMERCIAL CONTENT DIRECTOR, ITV

- In the US, product placement is worth roughly 5 per cent of all TV advertising revenue. Do you think the market will eventually grow to that size in the UK?

Product placement has been embedded in the way US clients trade TV campaigns for some time, and the regulations are so vastly different to the UK that I think this share level gives a false view of UK market expectations in the short term. It is also impossible to really extract US figures for this area, as so much is tied into wider spot trading. Product placement in the UK will follow a different path, against a background of strict regulation, but we believe it will grow over the coming years.

- Ofcom currently prohibits placement of selected product categories and genres of programming. Do you feel, in time, these laws will relax to fit in line with those in the US?

There is no suggestion that this will happen in the near future. Although brands in these categories will often naturally appear in shows as part of script authenticity, there is much concern around paid-for placement activity in these areas, particularly given the current TV advertising rules governing these product zones.

- How has the initial uptake been so far in the UK?

Gradual and, at times, slower than many people initially hoped for, although, at ITV, we have actively marketed more than 30 shows across this year and next. One of the main challenges is that some clients still believe they will receive US-style product placement and can influence editorial scenarios, which is clearly not the case in the UK market. For every broadcaster, the editorial integrity of our programming has to be the number-one priority. Going forward, I think there's a real appetite for some case histories with first-hand evidence of how a client's campaign can really benefit from this new area.

- Can product placement be effective as a standalone vehicle or should it be combined with other forms of TV advertising such as TV spots and sponsorship idents etc?

Standalone product placement can definitely work, but there is no doubt that being part of an integrated multi-platform campaign is the real prize. At ITV, we've promised clients a new way of working with us, and part of that is working in partnership to create and execute these integrated campaigns. The advent of second-screen advertising and companion apps specifically designed to activate the on-screen product placement will definitely form vital components of campaigns in the future.

- Has the effectiveness of product placement been proven in the UK?

This year has been all about putting the processes in place that are needed to package and execute quality and valued product placement for clients, broadcasters and producers. We've seen some great results from our first placement in This Morning, with initial research showing that 30 per cent of all This Morning viewers knew there was product placement within the programme while 90 per cent thought it was an appropriate placement for the show.

- How do media owners currently value product placement? Do the current valuation methods represent fair value for money for the client?

We spent a long time researching how product placement is valued around the world and our methodology, based upon the combined factors of "brand presence" with "brand integration with content", is robust and widely acknowledged as best practice. And, yes, I believe that product placement can absolutely offer clients high-quality engagement combined with first-class value.

NICK PRICE HEAD OF CONTENT FOR BRANDED, MPG MEDIA CONTACTS

- In the US, product placement is worth roughly 5 per cent of all TV advertising revenue. Do you think the market will eventually grow to that size in the UK?

The UK market is far more regulated than the US market, so although it is true that in mature markets where product placement exists, the value tends to settle at 5 per cent, in the UK, I suspect the extra regulations - while they exist - may limit us to more like 3 per cent to 4 per cent, or about £100 million per annum.

- Ofcom currently prohibits placement of selected product categories and genres of programming. Do you feel, in time, these laws will relax to fit in line with those in the US?

I believe the laws will relax, but not to the same extent as in the US, where there is no regulation. Currently, the rules here are still tight enough that they are having a drag on the opportunities. However, as the first examples filter through and people begin to become comfortable with product placement in programming (which, for the record, we have been watching for years in US imports and films), then it will become easier for Ofcom to allow more leeway.

- How has the initial uptake been so far in the UK?

Initial uptake has been slow but, given the complexities of the deals, the newness of the area and Ofcom regulations still being relatively tight, this was to be expected. I suspect that 2012 will see a lot more activity but that it will take some years to reach the £100 million mark.

- Can product placement be effective as a standalone vehicle or should it be combined with other forms of TV advertising such as TV spots and sponsorship idents etc?

There is clear evidence that a simple product placement is effective in its own right in terms of creating implicit brand awareness and delivering on context and credibility for the brand, particularly if the placement is carried out over a decent period of time. What cannot be denied is that integrated deals that run across spot, sponsorship and online already deliver improved value for brands by driving a combination of metrics. I fully expect product placement to become a part of these integrations, which will only serve to amplify its overall effectiveness.

- Has the effectiveness of product placement been proven in the UK?

Initial case studies are showing good value for brands and, as deals become more integrated, this value will only increase and become part of the standard marketing mix. There is no doubt that it works - this has been proven time and again in other markets and will be proven here too. However, with only six deals in the market to date, it will take a while longer for us to have the UK-based evidence.

- How do media owners currently value product placement? Do the current valuation methods represent fair value for money for the client?

There is some variance in approach as media owners work out how they want to price the opportunities but, broadly speaking, it is being valued on a metric that is based on the spot value for the slot in which it plays. The value is then factored up or down depending on duration, the quality of the placement, positioning and context. What we found in our Coronation Street/Nationwide deal is that many of these metrics can be debated in terms of the value to the brand so there is always a negotiation to be had, but, broadly speaking, the valuations have been fair.